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<p class="p1"><span style="line-height: 1.5em;"><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div><p></p></div></div>Hundreds of Russian banks have no choice but to close down, merge or be acquired by larger rivals as a result of mismanagement, experts told <a href="http://www.bloomberg.com/news/articles/2015-04-15/russian-banks-vanish-as-crisis-accelerates-cleanup" target="_blank">Bloomberg</a>.</span></p><p class="p1"><span style="line-height: 1.5em;">The country has more than 820 lenders, a staggering number of which have a high ratio of bad loans on their balance sheets. Many will soon disappear.</span></p><p class="p1"><span class="s1">"Russia has far too many licensed banks," Christopher Weafer, a senior partner at Moscow-based consulting firm Macro Advisory, told Bloomberg. "Cutting the number to between 200 and 300 would be a very positive step."</span></p><p class="p1"><span class="s1">The staggering report comes as Russian President Vladimir Putin claimed during an appearance on national television that Russian banks have "grown well" and the economy is beginning to climb out of recent doldrums.</span></p><p class="p1"><span class="s1">"Experts believe that we have passed the peak of the problems," Putin said during his annual question and answer show, according to <a href="http://www.globalpost.com/article/6518021/2015/04/16/putin-says-worst-over-russian-economy" target="_blank">AFP</a>. "We've corrected the rate of the national currency, nothing burst and everything is working."</span></p><p class="p1"><span class="s1">Consolidations in the banking sector often happen during economic hardships such as the Great Recession, which saw several U.S. banks fail or taken over by larger institutions.</span></p><p><span style="line-height: 1.5em;">But experts who spoke to Bloomberg say the country's banks will see bad loans climb from 9.5% to about 15% of total assets.</span></p><p class="p1"><span class="s1">"Consolidation is absolutely a must," Igor Vayn, CEO of investment bank Renaissance Capital, told Bloomberg. "A lot of these banks are inefficient, can't provide quality service and don't provide their clients with prudential lending practices."</span></p><p class="p1"><span class="s1">Corruption, poor lending practices and suspicions of money laundering and terror financing are also dragging the sector down - causing central bank Governor Elvira Nabiullina to revoke licenses or severely restrict some banks' viability.</span></p><p class="p1"><span style="line-height: 1.5em;">A further 100 banks have seen their licenses revoked by regulators for various reasons since the start of last year</span><span style="line-height: 1.5em;">, with eight of those actions coming in the last eight weeks, Nabiullina told Bloomberg.</span></p><p class="p1"><span class="s1">Svyaznoy Bank ZAO, Russia's 96th-largest, announced Wednesday that officials handed down a six-month suspension from accepting new deposits and other banking activities.</span></p><p class="p1"><span class="s1">And the country's banks exposed to Ukraine<a href="http://www.sharecast.com/news/russian-banks-nursed-5bn-losses-on-ukraine-exposure-in-2014-s-p-says/22658845.html"> lost $5 billion last year</a>, according to ratings agency Standard &amp; Poor's and face further losses "of a similar magnitude" this year.</span></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/russia-facts-2014-3">11 Facts That Show How Different Russia Is From The Rest Of The World</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="RtbDU1bDra7DfSubgs0WuD4Pg0DTxjxx" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

The Russian banking sector is about to implode

The <keyword id="3261283" type="UNKNOWN" weightage="20" keywordseo="Economic-Survey-2016">Economic Survey 2016</keyword> pointed out the increasing Non Performing Assets (NPAs), which have reduced the <keyword id="34507" type="UNKNOWN" weightage="20" keywordseo="banking-sector">banking sector</keyword>’s capacity to lend.<br />
<br />
Sluggish growth and increasing indebtedness in some sectors of the economy have impacted the assets quality of banks and this is a cause of concern.<br />
<br />
Liquidity conditions were generally tight during the first quarter of 2015-16, mainly due to slow government spending in the beginning of the year.<br />
<br />
After easing conditions during the Q2, the third quarter saw tightened liquidity conditions.<br />
<br />
The Economic Survey 16 stated that during the current financial year, year on year growth in gross bank credit outstanding has remained around 10%.<br />
<br />
The year on year growth in time deposits fell to 10.6% in December 2016 due to household saving were channelized to other areas like gold and real estate.<br />
<br />
The gross bank credit to the services sector grew at sub 7% in May – November 2015 though it increased to 9.2% in December 2015.<br />
In agriculture sector, there was a downturn from November 2014.<br />
<br />
The survey says that the slowdown in growth in the balance sheets of banks witnessed since 2011-12 continued in 2015-16.<br />
<br />
The estimated capital requirement is likely to be about Rs 1.8 trillion by 2018-19. Out of this, the government of India proposes to make Rs 70,000 crore available out of budgetary allocations during the current and succeeding years.<br />
<br />
Economic Survey 2015-16 mentions that the number of new basic saving bank deposit accounts rose considerably during the year on account of the government’s initiative under Pradhan Mantri Jan Dhan Yojna.<br />
<br />
The number of such account increased to 44.1 crore for the period ending September 2015 and total number of banking outlets went up to 5.67 lakhs.<br />
<br />
The Bombay Stock Exchange declined by 8.5% (Up to January 5, 2016) over March 2015, mainly on account of turmoil in Global Equity Markets.<br />
<br />
The net investment by Foreign Institutional Investors/FPIs in the Indian market has been Rs 63,663 crore in 2015 as compared to Rs 2,56,213 crore in 2014.<br />

Banks are in deep trouble!

<p><span>European stocks opened the week in negative territory, dragged lower by a stuttering banking sector on Monday as investors got their first chance to react <a href="http://uk.businessinsider.com/european-banking-authority-stress-test-results-july-2016-2016-7">to Friday's Europe-wide bank stress tests.</a></span></p><p><span>Stocks across the board fell on the day, but banks were by far the worst hit, with the STOXX European bank index dropping by 2.46% at the close. </span></p><p><span><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Investing.com</span></p></div><p></p></div></div></span></p><p><span>The worst hit single banking institution on the day was Italy's largest lender, UniCredit. UniCredit fell more than 9% after Friday's stress test showed a weaker than expected result. Here's how the bank looked on the day:</span></p><p><span><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Investing.com</span></p></div><p></p></div></div></span></p><p><span>In the <keyword id="6354868" type="COUNTRY" weightage="60" keywordseo="UK">UK</keyword>'s banking sector things were a little better stocks wise, and all but one major lender in the UK lost value on the day. Here's the scoreboard:</span></p><ul><li><span style="line-height: 1.5em;">Royal Bank of Scotland - down 1.61%</span></li><li><span style="line-height: 1.5em;">Barclays - down 2.07%</span></li><li><span style="line-height: 1.5em;">HSBC - down 1.08%</span></li><li><span style="line-height: 1.5em;">Lloyds - up 0.17%</span></li></ul><p><span>The only major European banking stock to see a substantial rise on Monday was stricken Italian lender Monte dei Paschi di Siena. At one point in the day Monte dei Paschi was up by more than 8.8%, and though it fell to the close, still finished the day higher by around 3.3%.</span></p><p><span>Monte dei Paschi's rise on the day was largely fuelled by <a href="http://uk.businessinsider.com/italian-businessman-corrado-passera-attempts-to-rescue-monte-dei-paschi-di-siena-2016-7">the last minute rescue deal agreed by the bank on Friday afternoon,</a> which went some way to assuaging fears from investors that Monte dei Paschi is on the brink of collapse. Here's the chart on the day:</span></p><p><span><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Investing.com</span></p></div><p></p></div></div></span></p><p><span>As a result of weak banking stocks, shares across the continent fell. Here's the Europe-wide scoreboard:</span></p><p><span><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Investing.com</span></p></div><p></p></div></div></span></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/malcolm-gladwell-revisionist-history-donate-princeton-vassar-bowdoin-tipping-point-outliers-blink-2016-7">MALCOLM GLADWELL: 'Anyone who gives a single dollar to Princeton has completely lost their mind'</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="tlNzV5NDE68LblejgkI-6sByYCuoiDZ7" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Europe's banking sector got hammered on Monday

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Reuters/Darrin Zammit Lupi</span></p></div><p></p></div></div>Europe is "over-banked" and must face up to the "demise" of some of the weaker banks in the sector, according to the chairman of UBS.</p><p>UBS boss Axel Weber argued for what he calls "creative destruction" across European banking, in order to react to the changing landscape of banking and to ensure that the sector stays competitive in the future.</p><p><span>"Europe is over-banked so you would expect to see the demise of some weak players in the market and then their clients would basically start migrating to other, stronger, banks," <a href="http://www.cnbc.com/2016/04/18/cnbc-transcript-interview-with-chairman-of-ubs-axel-weber.html">Weber said in an interview with CNBC</a>.</span></p><p><span>However, Weber argued that this isn't easy given the current climate of balance sheet reductions in the banking sector. Here's what he had to say (emphasis ours):</span></p><p style="padding-left: 30px;"><span>Now a lot of the rescue programmes that are in place, prevent that from happening so whilst all the banks are probably no longer discussing insolvency issues profitability should lead to the exit of some non-profitable banks or less profitable banks, but <strong>in a too big to fail environment it's very impossible almost for large banks to be able to acquire other banks because we are already facing a reduction in our balance sheet</strong> and for very profitable banks to take over clients and businesses from others because at zero rates there <strong>is an environment where the kind of creative destruction in the banking sector just doesn't happen.</strong></span></p><p><span>When asked if his comments meant that he thinks more banks need to fail, Weber said: </span></p><p style="padding-left: 30px;"><span><span>I wouldn't say fail, but we need more bank competition in the sense that the stronger players don't just help to support the weaker links but are actually able to take them over and integrate them into their own bank and therefore have a larger client base, create cost synergies, create more profitability and in that sense, Europe needs to move on and the banking sector needs to consolidate.</span></span></p><p><span><span>Fears about the strength of some banks within the European system are widespread, with <a href="http://uk.businessinsider.com/italy-5-billion-euro-rescue-for-its-weakest-banks-2016-4">last week's €5 billion rescue package for smaller lenders in Italy a prime example of concerns</a>.</span></span></p><p>The Italian government rallied bank executives, insurers and investors to put €5 billion (£4 billion) behind a rescue fund for its weakest banks.</p><p>The money will be poured into Atlante, which is a new fund designed to buy bad loans from lenders and invest in their shares in the hope that the re-energized banks will lend more to businesses and spur growth.</p><p>Earlier on Monday, as part of the rescue deal, it was announced that the IPO of Banca Popolare di Vicenza will now be underwritten by Atlante, rather than UniCredit - as had previously been expected.</p><p>However, some have argued that such rescue packages could be to the detriment of bigger banks, and the sector in general. On Wednesday last week, <a href="http://www.ft.com/cms/s/0/82918c10-0175-11e6-ac98-3c15a1aa2e62.html#axzz46ATmvwk9">as reported by the Financial Times,</a> ratings agency Fitch said: "In our view, the financial profiles of the large banks will weaken, and ratings could come under further pressure, if they are called on to continue to provide extraordinary support to the banking sector," in its analysis of the Italian rescue package.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/game-of-thrones-economics-westeros-iron-throne-lannisters-2016-4">This hidden subplot of 'Game of Thrones' spells out the real trouble for the Lannisters</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="tvNncydDrkw0Adz4yS0Vsg8DPK1cte-i" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Europe's banking sector needs 'creative destruction'

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Investing.com</span></p></div><p></p></div></div>Nigeria just put its banking system on alert.</p><p>The Central Bank of Nigeria announced earlier this week that it's replacing the management of the country's eighth biggest lender by assets, Skye Bank, after it failed to meet the minimum capital ratios, <a href="http://www.bloomberg.com/news/articles/2016-07-04/skye-bank-plunges-on-report-ceo-quit-amid-concerns-over-capital">according to Bloomberg's Emele Onu, Renee Bonorchis, and Paul Wallace</a><span>.</span></p><p><span><span>The CEO, the chairman, and 10 directors on the bank's board resigned on Monday.</span></span></p><p><span><span><span>The central bank added that Skye Bank's non-performing loan ratio has been above the regulatory limit for some time now, <a href="http://www.reuters.com/article/nigeria-skye-bank-idUSL8N19Q2KS">according to Reuters' </a><span><a href="http://www.reuters.com/article/nigeria-skye-bank-idUSL8N19Q2KS">Chijioke Ohuocha and Oludare Mayowa</a>.</span></span></span></span></p><p>Speaking <a href="http://www.bloomberg.com/news/articles/2016-07-04/skye-bank-plunges-on-report-ceo-quit-amid-concerns-over-capital">to reporters on Monday</a>, the central bank's governor, Godwin Emefiele, asserted that Skye Bank "is not in distress and remains a healthy bank in the system." And on Thursday, the central bank said that all its banks are safe, and that "there is, therefore, no need for panic withdrawals from any bank," <a href="http://www.bloomberg.com/news/articles/2016-07-07/nigeria-says-its-banks-are-safe-urges-against-panic-withdrawals">according to Bloomberg's Wallace</a>.</p><p>However, these comments haven't been enough to alleviate worries about the rest of the country's banking system.</p><p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>BAML</span></p></div><p></p></div></div>"... this development may raise fears about the health of Nigeria's entire banking sector; especially given the weak economic growth expected in 2016 (we forecast just 0.8% GDP growth this year)," wrote <span>Bank of America Merrill Lynch's </span><span>Africa economist</span><span> Oyin Anubi in a Wednesday note to clients.</span></p><p><span>Over the last few months, Nigeria has been badly bruised by various economic shocks such as <a href="http://www.businessinsider.com/opec-oil-producers-at-breaking-point-2016-5">lower oil prices</a>, <a href="http://www.businessinsider.com/nigeria-consumer-prices-march-2016-2016-4">dollar shortages</a>, and production outages caused by <a href="http://www.businessinsider.com/opec-nigeria-production-cut-2016-5">militant groups in the Niger Delta</a>.</span></p><p>Data from the Nigerian Bureau of Statistics released in late May revealed that the country's economy shrank way more than expected in the first quarter - by 0.4% year-over-year. Analysts promptly warned these numbers suggested that the country is headed for a "<a href="http://www.businessinsider.com/nigeria-gdp-head-into-full-blown-crisis-2016-5">full-blown economic crisis.</a>"</p><p><span>Banks in particular have been feeling the pain from the oil sector slump, given that the<span> sector gives about 26% of its loans to oil and gas companies, according to December 2015 data cited by </span><span>Anubi.</span></span></p><p>Notably, in this environment, Anubi argued that non-performing loans are "likely to continue the upward trend on weak growth." Here's what he wrote in his note to clients (emphasis ours):</p><p style="padding-left: 60px;"><span>"</span><strong>In the course of 2016, it is likely that a significant part of the rise in NPLs will be due to problem loans in the oil sector.</strong> Some banks have been proactive in this arena. In December 2015, Moody's claimed that 20% of oil and gas loans had already been restructured with maturity extensions and we expect that these activities have continued this year. <strong>However, there is a possibility that the downturn in the oil and gas sector (and in the overall economy) seen so far this year is worse than the banks anticipated, implying that there could be more pain ahead.</strong></p><p style="padding-left: 60px;">The operating environment in Nigeria is difficult. In S&amp;P's most recent review of the sector the rating outlook was revised to negative for six banks, mainly due to low oil prices, weak growth, FX shortages, higher cost of risk, liquidity pressures and falling asset quality. They expect NPLs to rise to 6.0% in 2016 from 5.5% in 2015, above the prudential CBN ceiling of 5.0%. Data from Q16 results of the largest banks shows average NPLs of 7.0%. History shows that lower oil prices tend to lead to higher NPLs. However, this time, the recovery in oil prices will to some extent be offset by lower oil production."</p><p><span><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>BAML</span></p></div><p></p></div></div>As for Skye Bank, its market value has plunged by more than 85% over the past five years, and is down about 40% in 2016 alone, <a href="http://www.bloomberg.com/news/articles/2016-07-04/skye-bank-plunges-on-report-ceo-quit-amid-concerns-over-capital">according to Bloomberg</a>.</span></p><p><span>The central bank had deemed Skye Bank as "systemically important," but, as Anubi points out, " this bank is only 4% of total industry assets. Nigeria's larger banks look better capitalized."</span></p><p><span></span>Plus, according to local press reports cited by Anubi, most of Nigeria's larger banks have stronger CAR ratios than Skye Bank. The latter's is reportedly below the 15% minimum requirement, while other lage banks are, on average, at 19.9%.</p><p>In any case, Nigeria's banking system might be something to keep an eye on.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Investing.com</span></p></div><p></p></div></div></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/marines-zulu-cobra-attack-helicopter-2016-7">The 'Zulu Cobra' helicopter is one of the Marines' most powerful weapons </a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="0zb3dnMTE6-QawCIxD9EmsObwInmKKBb" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Nigeria just put its banking sector on alert

<p>Banking sector net interest income and net interest margins via Deutsche Bank's David Bianco:</p><p><div class="KonaFilter image-container display-table"><div><div class="image"></div><p></p></div></div></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/nationwide-insurance-industry-loss-ratio-2015-2">Nationwide's Super Bowl commercial about dead children is about corporate profits ... in a way that we can all appreciate</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="9rbTk0czrPq8J40cVbMQn_BvP7NgiiIY" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Banking sector net interest income and net interest margins

<p><div class="KonaFilter image-container float_right"><div class="image on-image"><p class="source"><span>REUTERS/Carlos Barria </span></p><p class="caption">A businessman looks at his mobile phone as he walks in the financial area of Pudong in Shanghai May 30, 2013.</p></div><p></p></div>Investors are worried that defaults in China's shadow banking system could trigger a financial crisis. </p>
<p>Chinese policymakers have also grown increasingly cautious, issuing a new set of guidelines this year, known as <a href="http://www.businessinsider.com/china-cracks-down-on-shadow-banking-2014-1">Document No. 107</a> to curb the shadow banking sector.</p>
<p>Shadow banking refers to financing activities that occur off-balance sheet and largely goes unregulated.</p>
<p>But in a new report titled 'Why China Is Not Facing A Lehman Moment', UBS' Tao Wang writes that China's "shadow banking system is much smaller relative to the size of its overall financial system when compared with many developed economies such as the US."</p>
<p>She thinks China's shadow banking system was about 50-70% of GDP at the end of 2013. This compares to a global average of 117%, and 170% for the U.S. at the end of 2012 according to data from the Financial Stability Board.</p>
<p>Here's the chart that shows that China's shadow banking system is small compared to other countries. The Netherlands, UK, Switzerland, and the U.S. have much bigger shadow banking systems than China. and they also account for a larger part of their total credit system.</p>
<p>The growth in shadow banking in these countries was largely attributed to the proliferation of synthetic financial products ahead of the financial crisis. </p>
<p>The large size of the Netherlands' shadow banking sector is because of "the large number of special financial institutions (SFIs)," according to a <a href="http://www.dnb.nl/en/binaries/DNB_OS_10-05_uk_tcm47-281218.pdf">report from DNB - The Dutch Bank. </a></p>
<p><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image"><a title_source="UBS" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/5334643169bedd3b55184b20-960/screen shot 2014-03-27 at 1.44.15 pm.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>UBS</span></p></div><p></p></div></div></p>
<p>While China's shadow banking system is the fastest growing, its size is still manageable. Wang also thinks it's manageable because "lack of leverage and securitization, and mark-to-market mechanism in China's shadow banking system."</p>
<p>"Trust companies, corporate bond issuers and other shadow banking players in China are not highly leveraged. They also have almost no securitization, limiting the impact that any default would have on the entire financial system; and their underlying assets are mostly loans. In the event that a cluster of defaults triggers a mass unwind of shadow credit, assets that Chinese banks may be forced to bring back onto their balance sheets would largely be loan assets, which are simpler and more straight forward to "re-intermediate" than the MBS/ABS/CDO structures that US banks had to deal with."</p>
<p>Moreover, Chinese credit growth has been driven by "domestic, not foreign funding" and benefits from high savings.</p>
<p>"Simply put, a systemic banking crisis is not in sight," Wang writes. "For these reasons, should a credit squeeze take place in China (not our base case scenario), it should not be of Lehman proportions."</p>

UBS: China's Shadow Banking Sector Is Actually Pretty Small

<br /> <keyword id="6355261" type="POSITION" weightage="20" keywordseo="Finance-minister">Finance Minister</keyword> <keyword id="42575" type="PERSON" weightage="20" keywordseo="Arun-Jaitley">Arun Jaitley</keyword>’s budget 2017-18 wasn’t much thunderous as expected earlier. This budget coming after demonetisation drive of November last year has come up with not-so-slew of measures for the banking sector. The banking sector had a lot of expectation from this budget and it seems to be partially appeased with the same.<br />
<br />
<a href="http://www.businessinsider.in/budget/common-man-budget"> ALSO READ: COMMON MAN’S BUDGET</a><br />
<br />
Scroll through the slideshow below for details.

From boosting co-operative banks to digital payments: Here’s
how banking sector in #Budget2017 looks like

Jaipur, Jan 26 () Nobel laureate and economist Abhijit Banerjee here on Sunday said the banking sector in the country is "stressed" and the government is in no position to bail it out.
<p>Speaking to the media on the sidelines of the 13th Jaipur Literature Festival, Banerjee said the demand slowdown in the automobile sector also shows that people are lacking confidence in the economy. 
</p><p>"Financial sector is the biggest stress point currently. There is no question that the finance sector is something we should worry about, the banking sector is stressed. The government really is not in a position to bail it out, so we are talking about a long process of attrition, that's going to be costly.
</p><p>"We also know that due to a demand deficit in the economy, cars and two-wheelers are not selling, and those things are signs of a general fact that people lack confidence that the economy is going to grow fast so they are holding back, they are not spending," he said.
</p><p>The author of "Good Economics for Hard Times" added that the slowdown in the economy will also adversely impact poverty alleviation in the country as urban and rural sectors are interdependent.
</p><p>"Poverty alleviation has been happening mostly on the strength of the fact that urban sector creates low skill jobs, and a lot of rural sector works in the urban sector and sends money back. 
</p><p>"That's the peak source of transmission of growth from urban sector to rural sector. And as soon as the urban sector slows down the rural sector, the people in construction work don't have as many jobs. All of that will feed back on the rural sector," the 58-year-old Indian-American economist said.
</p><p>Answering to a question - how will economic policies work if people have a lack of trust in the data, he said the government "should worry about this issue" as foreign investors are getting "nervous".
</p>"They don't know where they are going, what they are getting into, I mean those are real issues the government should look into. If it wants to have more investment and more involvement in the global economy, then I think it needs to provide the true data to people," he said.  MAH  MKJ

Banking sector is stressed, govt in no position to bail it out: Abhijit Banerjee

New Delhi, Mar 6 () The RBI superseding the board of Yes Bank casts light on governance risks in India's banking sector, Fitch Ratings said on Friday.<p>Fitch said there is a risk that the already poor operating environment for the banking sector could suffer further impairment if the government's efforts to tackle problems in the bank fail to provide reassurance to depositors and investors.</p><p>"The Reserve Bank of India (RBI) takeover of Yes Bank casts light on governance risks in India's banking sector," Fitch Ratings, which has a negative outlook on India's banking sector, said in a statement.</p><p>The central bank's takeover of Yes Bank appears intended to restore depositor confidence.</p><p>"However, we believe that there is a risk that the RBI's move could backfire if it prompts depositors to shift their money to institutions that are perceived to be safer. </p><p>This could pose liquidity challenges, particularly for smaller private banks with weaker franchises or more limited access to support from parent entities," Fitch added.</p><p>The global rating agency said it is also possible that the domestic wholesale debt markets may experience another crisis of confidence, resulting in a tightening of financing conditions. </p><p>"This could overshadow the central bank's recent efforts to boost liquidity in the system, and thereby expose non-bank financial institutions and the real estate sector to further pressures," it said.</p><p>Stating that the speed of the authorities' resolution of the situation at Yes Bank is likely to be an important factor in determining the reaction of depositors and financial markets, it said the onus ultimately falls on the regulator to orchestrate the process under powers provided by the RBI Act, which outlines voluntary or forced mergers as the available options.</p><p>Yes Bank is a medium-sized private sector bank, which accounts for around 2 per cent each of system assets and deposits. The bank ran into trouble following the central's bank's asset quality reviews in 2017 and 2018, which led to sharp increases in its impaired loans ratio and uncovered significant governance lapses that led to a complete change of management. </p><p> The bank subsequently struggled to address its capitalisation issues, against a background of sluggish economic growth and a tougher financing environment, Fitch added.</p><p>The Reserve Bank on Thursday imposed a moratorium on the capital-starved Yes Bank, capping withdrawals at Rs 50,000 per account and superseded the board of the private sector lender with immediate effect.</p><p>Yes Bank will not be able to grant or renew any loan or advance, make any investment, incur any liability or agree to disburse any payment.</p>As per RBI's draft reconstruction scheme, State Bank of India will pick up 49 per cent stake in the crisis-ridden Yes Bank under a government-approved bailout plan.   JDMKJ

Crisis at Yes Bank highlights governance risk in India's banking sector: Fitch

<ul class="summary-list"><li>US stocks slid on Thursday as investors dealt with fresh volatility in bank shares.</li><li>All three indexes ended the day lower, with the Dow shedding almost 300 points. </li></ul><p>US stocks slid on Thursday as investors fretted over more banking turmoil. </p><p>All three indexes ended the day lower, with the Dow Jones Industrial Average shedding almost 300 points.</p><p>Shares of PacWest dropped 50% as confidence continued to waver in the US banking sector. Meanwhile, Western Alliance stock dropped nearly 40% the lender denied a recent report that executives are exploring a possible sale.</p><p>The drop in stocks extended yesterday's losses after the Federal Reserve hiked rates for a 10th time, adding to fears that the economy could be headed for a recession. </p><p><strong>Here's where US indexes at the 4:00 p.m. closing bell on Thursday: </strong></p><ul><li><a href="https://markets.businessinsider.com/index/s&amp;p_500?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets"><strong>S&amp;P 500</strong></a><strong>: 4,061.22, down 0.72% </strong></li></ul><ul><li><a href="https://markets.businessinsider.com/index/dow_jones?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets"><strong>Dow Jones Industrial Average</strong></a><strong>: 33,127.74, down 0.86% (286.50 points)</strong></li></ul><ul><li><a href="https://markets.businessinsider.com/index/nasdaq_composite?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets"><strong>Nasdaq Composite</strong></a><strong>: 11,966.40, down 0.49% </strong></li></ul><p><strong>Here's what else is going on: </strong></p><ul><li><a href="https://markets.businessinsider.com/news/bonds/recession-debt-crisis-us-default-republican-deal-moodys-mark-zandi-2023-5">A recession is more likely under the Republican's debt ceiling plan</a>, Moody's chief economist said.</li><li><a href="https://markets.businessinsider.com/news/stocks/banks-crisis-deposits-collapse-accounts-safe-poll-americans-svb-fdic-2023-5">Nearly half of Americans say they're worried</a> about their money as banking turmoil continues.</li><li><a href="https://markets.businessinsider.com/news/stocks/fdic-deposit-insurance-blanket-bill-ackman-banking-crisis-first-republic-2023-5">Extending FDIC deposit insurance</a> could cost banks' customers more, a former FDIC chair said.</li><li><a href="https://markets.businessinsider.com/news/stocks/western-alliance-stock-price-bank-denies-sale-ft-report-wal-2023-5">Western Alliance shares saw wild swings</a> as the bank denied a report of a possible sale.</li><li><a href="https://markets.businessinsider.com/news/stocks/chatgpt-ai-stock-portfolio-outperforming-investment-uk-funds-finder-outlook-2023-5">A stock portfolio created by ChatGPT</a> is outperforming the top UK investment funds.</li></ul><p><strong>In commodities, bonds, and crypto: </strong></p><ul><li>Oil prices wavered, with<a href="https://markets.businessinsider.com/commodities/oil-price?type=wti"> West Texas Intermediate</a> down 0.19% to $68.47 a barrel. <a href="https://markets.businessinsider.com/commodities/oil-price?utm_medium=ingest&amp;utm_source=markets">Brent crude</a>, the international benchmark, edged higher to $72.40 a barrel</li><li><a href="https://markets.businessinsider.com/commodities/gold-price?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets">Gold</a> rose 1% to $2,058.70 per ounce</li><li>The<a href="https://markets.businessinsider.com/rates/u-s--rates-10-years?utm_medium=ingest&amp;utm_source=markets"> 10-year yield</a> fell three basis points to 3.37%</li><li><a href="https://markets.businessinsider.com/currencies/btc-usd?utm_medium=ingest&amp;utm_source=markets">Bitcoin</a> moved up 1.81% to $28,867.11</li></ul>

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